Legal Recourse Pursued

1 November 2017

FBME Ltd and the Saab family are deeply disappointed by the D.C. Circuit’s denial of rehearing earlier today. Although FBME Ltd. was quickly reinstated such that it always retained standing and ability to sue under the governing law of the Cayman Islands, its appeal has been dismissed and the merits have been left undecided. The result now is the same as it has been in so many instances where FinCEN and the U.S. government have imposed the dreaded fifth special measure under Section 311 of the USA Patriot Act: a foreign bank has been subjected to the death penalty and wiped out without getting its full and fair day in court.

In this case, flaws in FinCEN’s process and substantive rationale were repeatedly exposed at the trial level. Even while FinCEN was permitted to rely upon a black box of secret evidence at the expense of FBME Bank, its defense of its final rule did not withstand scrutiny: FBME Bank initially obtained a preliminary injunction based on its likelihood of succeeding in its challenge to the initial rule; then, after FinCEN abandoned its initial rule and obtained a voluntary remand, FinCEN’s second final rule was attended by notice deprivations and gaps in reasoning, the former of which were forgiven as “harmless” and the latter of which led to yet another remand; only on a third pass through the trial court was FinCEN’s current final rule upheld. And FinCEN has centrally relied, from start to finish, on inputs from the Central Bank of Cyprus without regard for proof positive that the Central Bank of Cyprus has been biased and unprincipled in concocting the supposed case against FBME.

The issues presented by the ensuing appeal to the D.C. Circuit were numerous, meritorious, and essential to shining appellate light on 311 determinations that FinCEN has long made under cover of darkness. Unfortunately, the Government of Tanzania did not permit FBME Bank to proceed with its appeal; after placing the bank in liquidation, it withdrew authorization for the bank to continue with the appeal. When FBME Ltd. sought to continue solo with the appeal, the fact that it had been temporarily “struck out” in the Cayman Islands – because its prior administrator there had withdrawn citing post-rule concerns about FBME’s risk profile – proved fatal and led the D.C. Circuit to dismiss the appeal without reaching the merits.

Thus, FinCEN has yet again succeeded in wiping out a foreign bank without answering to appellate review on the merits. This state of affairs is unfair to this bank, its shareholders and depositors around the world. More broadly, any fair-minded observer who values justice and the rule of law should be troubled by this outcome. FBME was a family-owned bank that worked strenuously to meet every compliance requirement and to engage responsively with all regulators. If FinCEN perceived otherwise, it should have made its case against FBME from the outset by supplying requisite notice, substantive explanation, and proof. But that did not happen. If FinCEN’s persisting fixation on destroying this bank without regard for niceties of facts, administrative procedure, and basic fairness somehow comports with U.S. law, the D.C. Circuit should have so decided. But that did not happen, either.

FBME Ltd. and the Saab family regret not being able to see FBME’s challenge at least reach its fitting conclusion on appeal to the D.C. Circuit. At the same time, we will be continuing to pursue legal recourse to the highest level and to do all we can to obtain resolution through all available channels.